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PalmPilot continues winning ways

Maker 3Com saw 1998 sales increase 57 percent increase over 1997 numbers, reaching 1.6 million units.

3Com's PalmPilot continued its winning ways in the war of the handhelds last year, according to a new research report.

Some 1.6 million 3Com PalmPilot devices shipped in 1998, making it the top-selling handheld device. The Santa Clara, California, company saw sales increase 57 percent over 1997 numbers, Dataquest said.

Overall, the market for handheld devices--including palm-size devices like the PalmPilot, handheld "clamshell" devices, and companion notebooks running the Windows CE operating system--grew 61.4 percent to 3.9 million units last year. Dataquest is predicting continued strong growth as companies bring forth smaller and lighter products in a market moves out of its infancy.

Palm Computing did particularly well in 1998, said Dataquest analyst Scott Miller, because it managed to almost double its installed base while only incrementally evolving its product lineups.

"The fact that [Palm Computing] doubled shipments in 1998 with a product family that was very similar to last year's lineup leads me to believe that we're pushing past that group of early adopters," said Miller. While handheld devices haven't received mainstream acceptance yet, manufacturers are getting closer to tapping into the mass market, he noted.

Sharp was the second largest handheld vendor in 1998 with 20.8 percent market share. Britain's Psion was third with 13 percent market share.

The threat Palm Computing faces from Microsoft's Windows CE effort has not yet fully materialized, but is starting to make inroads, the survey shows. The Palm Computing's Palm operating system continued to dominate the handheld segment, accounting for 41 percent of 1998 handheld shipments. Windows CE was the No. 2 operating system in the handheld market with 25 percent of the market, followed by Psion's Epoc32, which reached 13 percent of the market.

3Com is likely to hold on to its top spot in the handheld market in the near term, but larger form factor devices based on Windows CE--which Dataquest terms companion notebooks--will become a more popular option for mobile professionals in 1999. By the year 2002, the market for palmtop devices should reach 8 million units, while Dataquest estimates around 7.5 million companion notebooks will ship.